SMM Morning Review – 2011/9/1 Nickel Market

SHANGHAI, Sept. 1 (SMM) – LME nickel prices opened at USD 21,805/mt, and closed at USD 22,290/mt overnight, up by USD 380/mt from a day earlier, with the highest price at USD 22,450/mt and the lowest price at USD 21,755/mt. Daily trading volumes were 2,351 lots, down by 435 lots from a day earlier. Positions were 85,266 lots, down by 927 lots. LME nickel inventories were 103, 800 mt, down by USD 1,980 mt from a day earlier.

LME nickel prices fluctuated higher and made significant breakthrough during the European trading hours. Boosted by US positive economic data and rally in equity market, LME nickel prices advanced to hit a high of USD 22,450/mt. Finally, LME nickel prices closed at USD 22,290/mt, up by USD 380/mt from day earlier. Technically speaking, LME nickel prices just broke through 20-day moving average and are pointing to 30-day moving average, while trading volumes and positions both waned, indicating cautious sentiment before release of Friday’s non-farm employment payroll number.

On Wednesday, ADP employment data for August was slightly lower than expected. However, the Chicago PMI for August and monthly rate of factory orders for July were far better than expectation. Positive economic data from the US boosted market sentiment, with equity markets in both the US and EU rallied. Exchange market remained cautiously before release of Friday’s non-farm employment payroll number. The euro was slightly dragged down by weak employment data in the euro zone, while the US dollar closed with slightly gains. U.S. crude oil price fell on Wednesday as U.S. crude inventories increased sharply last week, but better-than-expected economic data limited the loss, with prices finally closing largely flat. Gold prices fell to certain extent.

LME nickel prices made significant breakthrough overnight, and close attention should be paid to PMI from China. It is expected that LME nickel prices will continue to rebound in the short term, with next target at USD 22,600/mt. In the Shanghai nickel spot market, overnight LME nickel price hike will boost spot nickel prices to certain extent. SMM expects that spot nickel prices will move in the RMB 163,500-164,500/mt range on Thursday.